Fama and French Three Factor Model
The Fama and French Three Factor Model is a corollary of the Capital Asset Pricing Model (CAPM). It determines the required rate of return… Read Article
Capital Asset Pricing Model (CAPM)
Equity Risk Premium
What is Equity Risk Premium?Investing in equity is not risk-free. The risk is not only associated with returns, but the capital is also not… Read Article
Advantages and Disadvantages of CAPM
What is CAPM?As the name itself suggest, the Capital Asset Pricing Model (CAPM) is used for pricing the security with a given risk. This… Read Article
Risk Free Rate – What It Is And Why It’s Important?
The risk-free rate is the return on an investment that carries no risk or zero risk. It is the minimum return that an investor… Read Article
Systematic Risk – Meaning, Types And How To Measure It
Systematic risk occurs due to macroeconomic factors. It is also called market risk or non-diversifiable or volatility risk as it is beyond the control… Read Article
Risk-Return Tradeoff
Risk-Return Tradeoff is the relationship between the risk of investing in a financial market instrument vis-à-vis the expected or potential return from the same.Risk-Return… Read Article
Unlevered Beta
Unlevered Beta DefinitionIt is a risk measurement metric that compares the risk of a company without any debt to the risk of the market.… Read Article
Beta Coefficient in Finance
Beta DefinitionBeta is a measure of volatility or risk of a stock in relation to market risk. Also known as the beta coefficient (β),… Read Article
Systematic Vs Unsystematic Risks
Definition of Systematic RiskSystematic risk is also referred to as non-diversifiable risk or market risk. Systematic risk is the fluctuations in the returns on… Read Article
Market Risk Premium
Meaning of Market Risk PremiumThe additional return an investor receives for holding a risky market portfolio instead of risk-free assets is termed as a… Read Article
Arbitrage Pricing Theory
Arbitrage Pricing Theory (APT) is an alternate version of the Capital Asset Pricing Model (CAPM). This theory, like CAPM, provides investors with an estimated… Read Article